Govt asks airlines to revisit cancellation fee

Domestic airlines have increased air fares by as much as 25% since early September as their costs surged because of the falling rupee and high fuel prices. Photo: Ramesh Pathania/Mint

New Delhi: The civil aviation ministry on Friday steered clear of asking airlines to reduce fares following a recent spike but sought a review of the increase in cancellation charges.

Some domestic airlines including Jet Airways (India) Ltd and SpiceJet Ltd increased cancellation fees from Rs.1,000 a ticket to Rs.1,500 last fortnight as they seek new ways to boost revenues to make up for increased costs and slowing traffic. The ministry, in its quarterly meeting with airline chief executives on Friday, asked the airlines to reduce the cancellation fees.

“There was no talk of airfares,” a person who was present at the meeting said, but declined to be identified. “But airlines have been told to charge cancellation fee based on differential pricing and (the) time the ticket was booked rather than one flat fee charged now for all tickets.”

Domestic airlines have increased air fares by as much as 25% since early September as their costs surged because of the falling rupee and high fuel prices. As a result, travelling business class from Delhi to Mumbai has become more expensive than flying to London.

The ministry was expected to take up the issue of the increased fares at the meeting on Friday but it did not potentially because the airlines are already burdened by losses.

Airlines have also increased baggage charges. SpiceJet has reduced the free baggage allowed per passenger to 15kg from 20 kg earlier this month.

The Friday meeting was attended by the director general of civil aviation Arun Mishra, aviation secretary K.N. Srivastava and other civil aviation ministry officials.

The CEOs and officials were also told that the ministry is formulating an aircraft leasing policy to streamline issues and avoid problems for lessors that have resulted in aircraft lease charges going up for India.

Separately, the US Federal Aviation Administration, or FAA, completed its week-long audit of the directorate general of civil aviation on Friday. Mishra said India will not be downgraded by the FAA. “India continues to be under category 1,” he said, referring to fears that FAA may downgrade India’s safety rankings to category 2, which would have banned any expansion of flights by Air India and Jet Airways to the US.